Green-star ratings can increase commercial rents
As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.
In September I briefly explained to you the NABERS "green rating" system, as it relates to commercial property.
Recent research (undertaken by the universities of Western Sydney and Maastricht in the Netherlands) has been released by the Australian Property Institute and Property Funds Association of Australia, under the title of Building Better Returns.
The report reveals that a five-star NABERS Energy-rated building would provide a 9% value premium overall, compared with buildings without any ranking.
Interestingly, there was no value premium found for office buildings below a three-star NABERS rating. In fact, rentals within these lower-rated buildings appear to be discounted by between 6% and 9%, compared with 5-star alternatives.
But that's not all bad news for landlords — because when times get tough, tenants tend to gravitate towards cheaper space.
Plus, with very few new five-star offerings currently in the pipeline, these lesser-rated buildings will experience significant rental growth over the next three to four years.
Bottom Line: If you do your homework, seek good professional advice and "cut your cloth" to fit within your budget, you can still make some serious gains over the next five years.
Chris Lang is an advisor to commercial property investors and gives keynote speeches and regular seminars on the best way to invest in commercial property. He maintains a blog, his-best.biz, which he updates regularly about the best way to get the most out of your commercial property investment.